Unit 17 Closings Flashcards
Define accrued items
On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property. 339
Define affiliated business arrangement (ABA)
Practice of one company offering a package of services to consumers. 323
Define closing
An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer. 316
Define closing statement
A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction. 336
Define credit
On a closing statement, an amount entered in a person’s favor—either an amount the party has paid or an amount for which the party must be reimbursed. 336
Define debit
On a closing statement, an amount charged; that is, an amount that the debited party must pay. 336
Define escrow account
The trust account established by a real estate professional under the provisions of the license law for the purpose of holding funds on behalf of the real estate professional’s principal or some other person until the consummation or termination of a transaction; trust account established by an escrow agent to hold funds pending distribution at the closing of a transaction. (Kyle 527)
Define escrow closing
Occurs when a disinterested third party is authorized to act as escrow agent (escrow holder) and to coordinate the closing activities on behalf of the buyer and the seller. 321 (Kyle 527)
Define Good Faith Estimate (GFE)
An estimate of all closing fees that was formerly provided to a borrower within three days of the loan application as was required by the Real Estate Settlement Procedures Act (RESPA).
Define impound accounts
An account that the mortgage lender may require a borrower to have to accumulate funds to pay future real estate taxes and insurance premiums. 337
Define delivery and acceptance
When the title to property is delivered by the grantor and accepted by the grantee. 137
Define Mortgage Disclosure Improvement Act (MDIA)
Enacted in July 2008 as an amendment to the Truth in Lending Act (TILA) to require mortgage loan cost disclosures to consumers. Early disclosure (a good-faith estimate) of mortgage loan cost must be provided within three business days of receiving a consumer’s application for a mortgage loan; a creditor must wait seven business days after providing the early disclosures before closing the loan; and a creditor must provide new disclosures and wait an additional three business days before closing the loan, if a change occurs that makes the annual percentage rate quoted in the early disclosure inaccurate beyond a specified tolerance. 335 (Kyle 534)
Define mortgage servicing transfer statement
Disclosure required by the lender if the lender intends to sell or assign the right to service the loan to another loan servicer. The loan servicer must notify the borrower 15 days before the effective date of the loan transfer, including in the notice the name and address of the new servicer, toll-free telephone numbers, and the date the new servicer will begin accepting payments. 324 (Kyle 534-535)
Define prepaid items
On a closing statement, items that have been paid in advance by the seller, such as fuel costs and some real estate taxes, for which the seller must be reimbursed by the buyer. 339 (Kyle 537)
Define prorations
Expenses, either prepaid or paid in arrears, that are divided or distributed between the buyer and the seller at the closing. 338 (Kyle 538)
